2012_2_13_draft_DSM_decree_Fiji

7/29/2019 2012_2_13_draft_DSM_decree_Fiji

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GOVERNMENT OF FIJI

__________

INTERNATIONAL SEABED MINERAL MANAGEMENT DECREE 2013

(Decree No of 2013)

IN exercise of the powers vested in me as the President of the Republic of Fiji and the

Commander in Chief of Fiji Military Forces by virtue of the Executive Authority of Fiji Decree

2009, I hereby make the following Decree

TO GOVERN THE RIGHTS AND OBLIGATIONS OF PERSONS ENGAGED IN SEABED

MINERAL ACTIVITIES IN THE AREA BEYOND NATIONAL JURISDICTION UNDER

THE SPONSORSHIP OF FIJI, AND THE ASSOCIATED ADMINISTRATIVE FUNCTIONS

OF THE STATE

PART 1: PRELIMINARY

Short Title and Commencement

1. This Decree may be cited as the International Seabed Mineral Management Decree 2013, and

shall come into force on a date appointed by the Minister by notice published in the Gazette.

Interpretation2. In this Decree, unless the context other requires

The Area means the seabed and ocean floor and subsoil thereof beyond the limits of

national jurisdiction, as defined in Article 1(1) of the UN Convention on the Law of the Sea.

Contract Area means any part of the Area in respect of which there is in force a contract

between a Sponsored Party and the ISA for the conduct of Seabed Mineral Activities.

Exploitation means the recovery within the Area for commercial purposes of Seabed

Minerals and the extraction of minerals therefrom, including the construction and operation

of all mining, processing and transportation systems for the production and marketing of

metals, insofar as these activities take place at-sea.

Exploration means the

(a) search within the Area for Seabed Mineral deposits with exclusive rights;(b) the sampling and analysis of such deposits,(c) the testing of systems and equipment, and(d) the carrying out of studies,for the purpose of investigating whether those minerals can be commercially exploited.

Fiji means the Republic of Fiji.

The Fiji International Seabed Sponsorship Authority shall be the Ministry of Foreign

Affairs of the Government of Fiji.

AnIncident occurs when


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(a)any ship or installation or other similar item or structure while engaged in SeabedMineral Activities is lost, abandoned, capsized or incurs significant damage;

(b) loss of life or injury requiring hospitalisation occurs on board any ship or installationwhile engaged in Seabed Mineral Activities, except in the case of a loss of life that is

certified by an independent medical practitioner as being the result of natural causes;

(c) the conduct of Seabed Mineral Activities results in significant adverse impact to orunlawful pollution of the Marine Environment; or

(d) the ISA issues an emergency order in connection with the Seabed Mineral Activities.The International Seabed Authority or ISA means the International Seabed

Authority established by Part XI Section 4 of the UN Convention on the Law of the Sea as

the organisation through which States Parties to the UN Convention on the Law of the Sea

shall organise and control Seabed Mineral Activities in the Area.

Marine Environment means the environment of the sea, and includes the physical,

chemical, geological, biological and genetic components, conditions and factors which

interact and determine the productivity, state, condition and quality of the marine ecosystem,

the waters of the seas and oceans and the airspace above those waters, as well as the seabed

and ocean floor and subsoil thereof.

Marine Scientific Research means any lawful study, research or other related scientific

activity within the Area, whether fundamental or applied, intended to increase knowledge

about the Marine Environment for the benefit of all mankind, and not undertaken directly for

industrial or economic purposes, and not significantly altering the surface or subsurface of the

deep seabed nor significantly affecting the Marine Environment.

The Minister and the Ministry means the Minister of Foreign Affairs and Ministry of

Foreign Affairs within the Government of Fiji.

The Official Working Group means the official working group on deep sea minerals

established by the Government of Fijis Cabinet Decision CP(11)316 of 11 October 2011, as

further elaborated by Part 2 of this Decree.

Person means any natural person or business enterprise and includes, but is not limited

to, a corporation, partnership, cooperative, association, the State or any subdivision or agency

thereof, and any foreign State, subdivision or agency of such State or other entity.

The Precautionary Approach means that, in order to protect the environment, where

there are threats of serious or irreversible damage, lack of full scientific certainty shall not be

used as a reason for postponing cost-effective measures to prevent environmental

degradation.

Prescribed means prescribed by Regulations or other subordinate legislation made under

this Decree.


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Public Official means a person in the permanent or temporary employment of the

Government of Fiji.

The Qualification Criteria means the criteria that must be met before a Sponsorship

Certificate can be issued, as stipulated in section 20(2) of this Decree.

Rules of the ISA means any rules, regulations, or procedures adopted by the ISA

pursuant to powers conferred on the ISA by the UN Convention on the Law of the Sea that

are from time to time in force, and any contractual terms contained in a contract between the

ISA and a Sponsoring Party relating to Seabed Mineral Activities.

Seabed Minerals means the hard mineral resources of any part of the Area, including

those in crust, nodule or hydrothermal deposit form, which contain (in quantities greater than

trace) metalliferous or non-metalliferous elements.

Seabed Mineral Activities means operations for the Exploration or Exploitation of

Seabed Minerals within the Area under contract with the ISA, and under Fijis sponsorship

under this Decree.

Sponsored Party means a person who holds a current Sponsorship Certificate validly

issued under Part 3 of this Decree, that persons representatives or officers, and any person or

persons to whom the Sponsorship Certificate may lawfully have been assigned.

Sponsorship Applicant means a person applying for a Sponsorship Certificate under this

Decree.

Sponsorship Application means a Sponsorship Application made by a person for a

Sponsorship Certificate under this Decree.

Sponsorship Certificate means a certificate validly issued by Fiji under Part 3 of this

Decree.

Sponsoring State means a State Party to the UN Convention on the Law of the Sea,

sponsoring a person to carry out exploration or exploitation in the Area in accordance with

Article 153(2)(b) of the UN Convention on the Law of the Sea.

The UN Convention on the Law of the Sea means the United Nations Convention on

the Law of Sea of 10 December 1982 entered into force on 16 November 1994; the 1994

Agreement Relating to the Implementation of Part XI of the United Nations Convention on

the Law of the Sea of 10 December 1982, and any Annexes thereto.

Scope of this Decree

3.

(1)The objectives of this Decree are to

(a)establish a clear and stable legal operating environment for persons sponsored by Fijito undertake Seabed Mineral Activities in the Area;


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(b)ensure that Seabed Mineral Activities are carried out under Fijis effective control,and in a manner that is consistent with the Rules of the ISA and Fijis responsibilities

under the UN Convention on the Law of the Sea, and other applicable requirements of

international law.

(c) implement measures to maximise the benefits of Seabed Mineral Activities forpresent and future generations of Fijian people.

(2) In order to achieve its objectives, this Decree inter alia

(a) Identifies the responsible regulatory authority within Government to manage Fijisinvolvement with Seabed Mineral Activities.

(b)Establishes a system for the Sponsorship Application for, and grant of SponsorshipCertificates under which Sponsored Parties will be authorised to engage in Seabed

Mineral Activities under specific and enforceable conditions.

(c) Provides for the payment to Fiji of fees, royalties, and taxes in respect of SeabedMineral Activities.

(3)This Decree is made on the basis that the Rules of the ISA and the ISAs monitoring and

enforcement capacity will be developed in an appropriate and timely manner with for the

purpose of securing that Seabed Mineral Activities will comply with relevant standards

and obligations of international law.

Jurisdiction

4. By the enactment of this Decree, Fiji recognises

(a)The seabed resources of the Area to be the common heritage of mankind;(b)That the rights to the Area are governed by the UN Convention on the Law of the Sea

and the Rules of the ISA;

(c) The ISAs responsibility under the UN Convention on the Law of the Sea to organiseand control activities in the Area on behalf of mankind as a whole, including to:

(i) Process Sponsorship Applications for approval of plans of work for exploration

and exploitation in the Area;

(ii)Monitor compliance with plans of work, approved in the form of a contract,

including through a staff of inspectors;

(iii)Adopt rules, regulations and procedures necessary for the conduct of exploration

and exploitation in the Area; and

(iv)Adopt rules, regulations and procedures incorporating applicable standards for:

(a) the protection and preservation of the natural resources of the Area and the

prevention of damage to the flora and fauna of marine environment,

Hannah 14/2/13 2:29 PM

Comment: This needs to be amended such that the

Decree enables Fiji to negotiate financial terms forthe conduct of Seabed Mineral Activities on an

individual / case-by-case basis, by way of writtenagreement rather than a payment regime beingestablished within the Decree.


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(b) the prevention, reduction and control of: pollution and other hazards to, and

the interference with the ecological balance of, the marine environment.

(v) Exercise such control over activities in the Area as is necessary for the purpose of

securing compliance with the UN Convention on the Law of the Sea and the

Rules of the ISA by contractors carrying out activities in the Area

(d)The responsibility of States Parties to the UN Convention on the Law of the Sea,including the Republic of Fiji, to assist the ISA in exercising the duty outlined in

section 4(c)(v) of this Decree; and

(e) The duty of a Sponsoring to effectively control any person engaged in activities in theArea under its sponsorship, in order to ensure conformity of those activities with the

UN Convention on the Law of the Sea and the Rules of the ISA.

PART 2 FIJIS ADMINISTRATION FOR SPONSORSHIP OF SEABED MINERAL

ACTIVITIES

The Ministry as Fijis International Seabed Mineral Sponsorship Authority

5.

(1)The Minister (acting through the Ministry) shall be responsible for Fijis sponsorship and

regulation of Seabed Mineral Activities.

(2) In undertaking this role, the Minister shall be known as the Fiji International Seabed

Sponsorship Authority (or the FISSA) and shall have all reasonable powers required for

the performance of any of its functions, including a power to appoint such persons

qualified for the purpose, to assist in the discharge of the FISSAs functions.

(3)The FISSA shall:

(a) solicit and take into account in its decision-making any recommendations from theOfficial Working Group,

(b)Act in a way that is compatible with principles of best regulatory practice, includingthat regulatory activities should be proportionate, accountable, consistent, transparentand targeted only at cases in which action is needed.

Consultation

6. The FISSA may at any time and in any way that it sees fit consult with persons of relevant

expertise, interest groups, or the general public before taking a decision or action under this

Decree.

Objectives of the FISSA

11.The FISSA has the following objectives

(a)To provide a stable, transparent and accountable regime within Fiji for thesponsorship of Seabed Mineral Activities;


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(b)To maintain effective control of Seabed Mineral Activities and the protection andpreservation of the Marine Environment, by securing compliance by Sponsored

Parties with relevant rules and internationally agreed standards;

(c) To ensure that the conduct of Seabed Mineral Activities maximises benefits to Fijiand its people.

Functions of the FISSA

12.The FISSA has the following functions, to

(a)Receive and determine Sponsorship Applications, and prepare and issue Certificatesof Sponsorship for successful Sponsorship Applicants;

(b)Liaise with the ISA and any other relevant international organisations to facilitate aSponsored Partys application to the ISA for a contract, and Fijis and its Sponsored

Parties understanding of and compliance with relevant international laws, standards

and rules;

(c) Assist the ISA in its work to establish, monitor, implement, and secure compliancewith the Rules of the ISA;

(d)Undertake any advisory, supervisory or enforcement activities in relation to SeabedMineral Activities or the protection of the Marine Environment, in the event this is

required in addition to the ISAs work in order for Fiji to meet its obligations as

Sponsoring State;

(e) Require and review relevant reports and information, and maintain appropriaterecords, pertaining to Seabed Mineral Activities.

The Official Working Group

13.

(1)The Official Working Group shall, upon the FISSAs request, provide technical and

policy advice and recommendations to the FISSA to assist the FISSA in the performance

of its functions.

(2)The Official Working Group shall be composed of officials and other members as shall be

determined by the Minister from time to time.

High Court Jurisdiction

14.The High Court may conduct

(a) judicial review of administrative decisions, determinations or inquiries taken underthis Decree, or

(b)proceedings to establish liability and to provide recourse for compensation from aSponsored Party in the event of unlawful damage caused by Seabed Mineral

Activities, in accordance with Article 235(2) of the UN Convention on the Law of the

Sea.

Hannah 14/2/13 2:37 PM

Comment: LH would not accept the jurisdictionof the courts of Fiji, in case of dispute. The sub-

contract would specify that the parties would besubject to UK law and courts. LH therefore suggestsection 14 be deleted to avoid confusion. However

UNCLOS Art 235 requires that: States shall ensurethat recourse is available in accordance with their

legal systems for prompt and adequate

compensation or other relief inrespect of damage caused by pollution of the marineenvironment by

natural or juridical persons under theirjurisdiction. the ITLOS Advisory Opinionsummarises this as requiring the sponsoring State

toestablish procedures, and, if necessary, substantiverules governing claims for

damages before its domestic courts. Whether theproposed Fiji / LH model can navigate this

requirement and LHs requirement for UKarbitration remains a point to be explored.


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PART 3 SPONSORSHIP APPLICATION AND APPLICATION TO THE ISA

Invitation for Sponsorship Applications

15.The FISSA may in any manner it sees fit invite Sponsorship Applications, or entertain

discussions with Sponsorship Applicants or potential Sponsorship Applicants.

Eligibility to Perform Seabed Mineral Activities

16.To be eligible to perform Seabed Mineral Activities a person must first

(a)obtain a valid Sponsorship Certificate from the FISSA, and(b)obtain a valid contract from the ISA,

pertaining to those Seabed Mineral Activities.

The processing of Sponsorship Applications

17.The FISSA

(1)Must deal with Sponsorship Applications promptly, and in accordance with this Decree;

(2)May request further information from a Sponsorship Applicant, or request the

Sponsorship Applicant to amend any part of its Sponsorship Application, at any time

before making a recommendation under section 21 of this Decree and/or may return an

Sponsorship Application without a decision if the Sponsorship Applicant fails to complywith a request under this sub-section.

Evidence

18.

(1) In making a recommendation under section 21 of this Decree, the FISSA may take into

account any or all of the information submitted by the Sponsorship Applicant, and any

relevant information in the public domain, received from the Official Working Group or

other consultation, or otherwise held in the Government of Fijis records.

(2)A previous decision by the ISA to grant a Sponsorship Applicant a contract for activities

similar to those that are the subject of a Sponsorship Application may be considered by

the FISSA as evidence in relation to any of the Qualification Criteria for that Sponsorship

Application.

Content of a Sponsorship Application

19.A Sponsorship Application must be made in writing to the FISSA and must

(1)provide evidence that the Sponsorship Applicant meets the Qualification Criteria, and

(2) include

(a) the same content that is required by the Rules of the ISA for an application forapproval of a plan of work to obtain a contract for the proposed Seabed Mineral

Activities,

(b)written undertakings that the Sponsorship Applicant (i)

will fully comply with its obligations under the Rules of the ISA and this Decree;


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(ii) warranties that the content of the Sponsorship Application is true and accurate to

the best of its belief, and

(iii)intends to apply for a contract with the ISA to conduct Exploration or

Exploitation in the Area under sponsorship by Fiji;

(c) Copies or summaries of any studies conducted by the Sponsorship Applicant or otherdata in relation to the potential of the site or sites within which the proposed Seabed

Mineral Activities will be conducted;

(d)Copies or summaries of any studies conducted by the Sponsorship Applicant or otherdata in relation to potential impact of the Seabed Mineral Activities on the Marine

Environment;

(e) A financing plan and evidence of actual or intended ownership or lease of vessels andequipment required for the operation of the Seabed Mineral Activities;

(f) A list of employees required to operate the Seabed Mineral Activities, and anindication if any of these will be recruited from Fiji;

(g)A capacity-building programme providing for the training of personnel of Fiji;(h)Evidence of insurance or contingency funding adequate to cover damage that may be

caused by the Seabed Mineral Activities or the costs of responding to an Incident;

(i) The fee required by section 38(1) of this Decree;(j) A statement as to whether the Sponsored Party or any of its Directors has previously

been found on reasonable evidence to have:

(i) breached a material term or condition of the Rules of the ISA,

(ii)been convicted of an offence or incurred a civil penalty pertaining to the conduct

of Seabed Mineral Activities or similar sea or land based activities in another

jurisdiction; or

(iii)been convicted of an offence involving fraud or dishonesty;

(k) Any further matters as may be Prescribed.Qualification Criteria

20.

(1)The FISSA may recommend the issue of a Sponsorship Certificate if it is satisfied that the

undertakings required by section 19 have been given and the Qualification Criteria are

met.

(2) The Qualification Criteria are that

(a) the Sponsorship Applicant:(i) is an existing body corporate, registered in Fiji;

(ii)has, or will have at the commencement of the proposed Seabed Mineral

Activities, sufficient financial and technical resources and capability, to:

Hannah 20/2/13 2:58 PM

Hannah 20/2/13 2:58 PM

Hannah 14/2/13 2:42 PM

Comment: It is not realistic to expect accompany

to have this evidence (ie to have committed funds to

vessel hire) prior to having secured the ISA contract.Suggest to delete, or to reword such that the

company is simply asked to give an indication of itsplans in this regard?

Comment: It is not realistic to expect accompanyto have this evidence (ie to have committed funds to

insurance) prior to having secured the ISA contract.Suggest to delete, or to reword such that thecompany is simply asked to give an indication of its

plans in this regard?

Comment: Amend to shall


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(a)properly perform the Seabed Mineral Activities in compliance with the Rules

of the ISA; and

(b) to cover damage that may be caused by the Seabed Mineral Activities or the

costs of responding to an Incident

(iii)has paid any applicable fees;

(b)That the proposed Seabed Mineral Activities are consistent with the Rules of the ISAin relation to environmental management;

(c) Compatibility of the proposed Seabed Mineral Activities with applicable national andinternational laws, including those relating to safety at sea;

(d)That the proposed Seabed Mineral Activities will not unduly affect:(i) the rights other legitimate sea users, or

(ii) international peace and security; and

(e) That the Seabed Mineral Activities will not result in irreparable harm to anycommunity, cultural practice or industry in Fiji, and would be generally in the public

interest of the country, taking into account the potential for capacity-building and/orlocal employment and the long-term economic benefit to Fiji.

Sponsorship Certificate Recommendation

21.The FISSA must make a recommendation to the Cabinet whether to issue the Sponsorship

Applicant with a Sponsorship Certificate or deny the Sponsorship Applicant a Sponsorship

Certificate.

Notice of Sponsorship Certificate Decision

22.

(1)Within 10 days of a Sponsorship Certificate decision having been taken by the Cabinet

the FISSA will inform the Sponsorship Applicant, and where the decision is to deny the

Sponsorship Certificate, will at the same time provide a written statement of reasons for

that decision.(2)Where a decision is taken by the Cabinet to issue a Sponsorship Certificate, public notice

of the decision will be given by the FISSA within 30 days of that decision.

Terms of the Sponsorship Certificate

23.A Sponsorship Certificate, signed by the Minister, shall be issued to the Sponsored Party and

shall be in a form necessary to satisfy the Rules of the ISA, and shall contain

(a) the name of the Sponsored Party;(b)a statement that the Sponsored Party is

(i) a national of Fiji; or

(ii)subject to the effective control of Fiji or its nationals;

Hannah 14/2/13 2:45 PM

Hannah 14/2/13 2:46 PM

Hannah 14/2/13 2:47 PM

Comment: This would benefit from dividing into

two separate criteria. Also consider whether currentwording is appropriate: LH are required under

s.19(1) to provide evidence that the applicationmeets all Qualification Criteria. But cannot beexpected to evidence these two points, which are a

matter for Fiji Government. Suggest to remove (e)from Qualification Criteria but retain it as aseparate criteria for Fiji to evaluate in its decision.

Comment:Need to add express reference between

ss.21 and 22 to the fact that Cabinet takes a decisionwhether to issue or deny the Certificate.

Comment: Insert here an option for the Applicant

to re-submit an amended version of its claim(without another fee) within a specified time period.


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(c) a statement by the State that it sponsors the Sponsored Party;(d) the date of deposit by the State of its instrument of ratification of, or accession or

succession to, the UN Convention on the Law of the Sea;

(e) a declaration that the State assumes responsibility in accordance with article 139,article 153, paragraph 4, and Annex III, article 4, paragraph 4, of the UN Convention

on the Law of the Sea;

(f) the period of time for which the Sponsorship Certificate shall remain in force unlessotherwise terminated in accordance with this Decree;

(g)any other content reasonably required by the ISA or that the FISSA considers fit toinclude.

Application by Sponsored Party to ISA

24.

(1)A Sponsored Party may, on the basis of the Sponsorship Application, submit an

application to the ISA for a contract to Explore or Exploit in the Area under Fijis

sponsorship.

(2)The FISSA will provide all reasonable cooperation with the Sponsored Party to facilitatethe preparation, submission and support of the application to the ISA.

(3)The costs of presenting that application to the ISA, including any costs incurred by Fiji in

supporting the application before the ISA, will be met by the Sponsored Party.

PART 4 OBLIGATIONS OF SPONSORED PARTIES

Duties pertaining to Seabed Mineral Activities

25.Any person engaging in Seabed Mineral Activities is required, inter alia, to:

(1)Adhere to the provisions of the Rules of the ISA and this Decree.

(2)Comply with, and provide sufficient training, supervision and resources to employees,

agents or officers so as to ensure compliance with the Rules of the ISA and any other

instructions or requests of the ISA.

(3)Facilitate the ISAs and the FISSAs monitoring of Seabed Mineral Activities in

accordance with the Rules of the ISA and this Decree and comply with the reasonable

requests, directions or orders of ISA inspectors or FISSA observers.

(4)Apply the Precautionary Approach, and employ best environmental practice in

accordance with prevailing international standards in order to avoid, mitigate, or remedy

the adverse effects of Seabed Mineral Activities on the Marine Environment;

(5)Offering to Fiji opportunities for training in relation to, and participation in, the Seabed

Mineral Activities;

(6) At all material times maintain appropriate insurance policies that provide adequate cover

for identified risks and costs of damages that may be caused by the Seabed Mineral

Hannah 20/2/13 2:59 PM

Hannah 20/2/13 2:59 PM

Hannah 20/2/13 3:00 PM

Hannah 14/2/13 2:52 PM

Comment: LH consider it unfair both to becharged the admin fee andto require the Company

to cover its application costs. They suggest it should

be one or the other, not both.

Comment: LH request to add materialityqualifications (i.e. so the duty is not breached by atrivial or momentary failure to adhere)

Comment: LH request this be qualified to state

that these must be demonstrated adverse effects,otherwise the requirement is too broad / theoretical.

Comment: LH understands that it is obliged tooffer capacity-building opportunities via the ISA

programme, and if so would like that to be reflectedhere, rather than this becoming an additional dutyfor the Company. HL had a notion that if the

sponsoring company is a developing company, thesponsored company could make its own

arrangements with the sponsor for capacity-buildinginstead of using the ISA programme to check.


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Activities, or otherwise satisfy Fiji of its financial and technical capability to respond to

potential Incidents;

(7)Report to the ISA and the FISSA immediately in the event of an Incident occurring or

appearing reasonably likely to occur; and respond efficiently and responsibly to the

Incident, including by seeking and following the ISAs, and the FISSAs directions where

appropriate.

(8)

Submit to the ISA and the FISSA immediately in writing notice of any new informationarising or data collected that materially affect:

(a) the Qualification Criteria,(b) the programme of work, or(c) the Sponsored Partys ability to adhere to the terms of the Rules of the ISA;

(9) Not dump mineral materials or waste from any vessel except in accordance with relevant

international law or the Rules of the ISA.

(10)Not proceed or continue with the Seabed Mineral Activities without obtaining prior

written consent from the ISA to proceed, if evidence arises that to proceed is likely to

cause significant adverse impact to:

(a) the Marine Environment that was not anticipated in any environmental impactassessment previously conducted,

(b) the safety, health or welfare of any person, or(c) other existing or planned legitimate sea uses including but not limited to Marine

Scientific Research, navigation, submarine cables, fisheries or conservation activities.

(11)Upon submitting data, reports or other information to the ISA in relation to the Seabed

Mineral Activities, ensure that the content of these documents are true, accurate and

comprehensive, and provide copies of the same to the FISSA;

Liability of Sponsored Party and indemnity against third party claims

26.

(1)A Sponsored Party shall be responsible for the performance of all Seabed Mineral

Activities carried out within the Contract Area, and their compliance with the Rules of the

ISA; and will be liable for the actual amount of any compensation, damage or penalties

arising out of its failure so to comply, or out of any wrongful acts or omissions in the

conduct of the Seabed Mineral Activities.

(2)A Sponsored Party shall at all times keep Fiji indemnified against all actions,

proceedings, costs, charges, claims and demands which may be made or brought by any

third party in relation to its Seabed Mineral Activities.

PART 5 ROLE OF FIJI AS SPONSORING STATE

Duties as Sponsoring State

27.Fiji, via the FISSA, will

Hannah 14/2/13 2:55 PM

Comment: Check whether this is a duty not found

in the ISA Rules. Query whether it has much use i.e. how likely is it that one of those circumstanceswould arise at all (and if it did, that the Company

would not notify ISA). Consider deleting. Ifretaining this section, qualify it more narrowly (e.g.reasonably likely...)


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(1)ensure that its conduct in relation to the ISA, the Area and Seabed Mineral Activities

adheres to the requirements and standards established by general principles of

international law;

(2) take all appropriate means to exercise its effective control over Sponsored Parties,

seeking to ensure that any Seabed Mineral Activities are carried out in conformity with

the UN Convention on the Law of the Sea, the Rules of the ISA and other requirements

and standards established by general principles of international law;

(3)do all things reasonably necessary to give effect to its sponsorship of a Sponsored Party,

including undertaking any communications with, and providing any assistance,

documentation, certificates and undertakings to the ISA or other relevant party required in

respect of the Sponsorship;

(4)avoid imposing unnecessary, disproportionate, or duplicate regulatory burden on

Sponsored Parties;

(5)not impose requirements upon a Sponsored Party under this Decree or Regulations to be

made under this Decree except insofar as these are consistent with, and take into account

existing requirements imposed by, the UN Convention on the Law of the Sea, the Rules

of the ISA and other applicable standards of international law;

(6)Promote the application of the Precautionary Approach.

Monitoring powers

28.The FISSA reserves the power to make such examinations, inspections and enquiries of

Sponsored Parties and the conduct of Seabed Mineral Activities as are necessary to meet its

responsibilities under international law as a Sponsoring State, which may include the sending

of an observer to the site of the Seabed Mineral Activities and vessel or premises of the

Sponsored Party from time to time, upon giving reasonable notice to the Sponsored Party.

Administrative action

29.

(1) In the event ofthe FISSA determining that a Sponsored Party has materially breached, or

is at serious risk of materially breaching, the Rules of the ISA, or this Decree, the FISSA

may:

(a) issue written warnings, including warnings in relation to possible action the FISSAmay take in the event of future materialbreaches;

(b)enter into a written agreement providing for the Sponsored Party to undertake aprogramme of remedial action and to mitigate the risk of re-occurrence;

(c) issue a written notice requiring the Sponsored Party to take specified action, or nottake specified action, aimed to stop, remedy or mitigate the risk of occurrence or re-

occurrence ofmaterialbreach;

(d) in the case of actual materialbreach,

Hannah 14/2/13 2:55 PM

Hannah 14/2/13 2:56 PM

Hannah 14/2/13 2:57 PM

Comment: This should read not impose... to

match sub-para (5)

Comment: Suggest to (re)insert wording

clarifying the duties / role of such an observer e.g.that the observer would comply with the directions

of the captain,whilst on board the vessel etc.

Comment: Suggest to delete this second limb, as

it is hard to see how this circumstance could ever beevidenced.


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(i) impose upon the Sponsored Party monetary penalties proportionate to the

seriousness of the violation and in any case not exceeding [$amount], which

amount excludes any compensation payable for damage or harm.

(ii)commence a process under section 34 of this Decree to revoke the Sponsorship

Certificate.

(2)Action taken under subsection 29(1) of this Decree must be commensurate with the

gravity, frequency and other circumstances of the material breach, including the

Sponsored Partys previous conduct under Fijis Sponsorship.

PART 6 REGISTER, TERMINATION, TRANSFER, EXTENSION OF SPONSORSHIP

Records

30.

(1)The FISSA must retain up-to-date and accurate records of Sponsorship Applications

received, Sponsorship Certificates issued, and all ensuing communication, reports or

other information created or received.

(2)The FISSA shall ensure that all such records shall be held with appropriate

confidentiality, and will not disclose commercially sensitive information unless agreed

otherwise with the Sponsoring Party.

Security of Tenure

31.A Sponsorship Certificate shall remain in force unless and until it is terminated in accordance

with section 32 of this Decree

Termination

32.A Sponsorship Certificate terminates if, pursuant to this Decree

(a) It is made for a specified term and that term expires without renewal in accordancewith section 36,

(b) It is surrendered by the Sponsored Party in accordance with section 33 of this Decree,(c) It is revoked by the FISSA in accordance with section 34 of this Decree,

and upon termination all rights granted by Fiji shall cease and determine,

Surrender of Sponsorship

33.A Sponsored Party may at any time surrender a Sponsorship Certificate without penalty by

giving to the FISSA not less than six months' previous notice in writing to that effect.

Revocation of Sponsorship

34.The FISSA may revoke its Sponsorship Certificate under this section

(1) in any case, with the consent of the Sponsored Party;

(2)upon consultation with the Sponsored Party, where the Sponsored Party is prevented for a

continuous period exceeding two years from the date of signing the contract with the ISA

from undertaking the Seabed Mineral Activities despite taking all reasonable measures to

do so, because of events outside of the Sponsored Partys control;

Hannah 14/2/13 2:58 PM

Hannah 14/2/13 2:59 PM

Hannah 14/2/13 3:01 PM

Hannah 20/2/13 3:01 PM

Deleted: or anticipated

Comment: LH would expect a standalone non-

disclosure agreement to cover Fijis handling of theircommercial data.

Comment: Query whether there is a reason Fijiwould like this notice period to be so lengthy? LH

would prefer this to be shorter, or if that is notpossible to clarify that they would not be penalisedfor failure to conduct activities during that 6-month

notice period.

Comment: LH request to delete, otherwise Fiji

could unilaterally revoke the licence after 2 years

inaction, which creates too great an uncertainty forthe company.


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DRAFT 13/02/13

(3)where no material efforts have been made by the Sponsored Party to undertake the

Seabed Mineral Activities for a period exceeding five years from the date of signing the

contract with the ISA;

(4)where there has been a serious, persistent or wilful breach by the Sponsored Party of the

Rules of the ISA, the requirements of this Decree, or a final binding decision of a dispute

settlement body applicable to it; and such breach either cannot be remedied or has not

been remedied upon the giving of reasonable notice by the FISSA;

(5)where the Sponsored Party knowingly or recklessly provides the ISA or the FISSA with

information which is false or misleading in a material particular, or fails to retain or

wilfully alters, suppresses, conceals or destroys any document which is required to be

produced to the ISA or the FISSA; or

(6) where, following at least two written reminders from FISSA, any payment or deposit

required under section 38 or 42 of this Decree is in arrears or unpaid for six months

following the day on which it ought to have been paid.

Notice of revocation

35.Before making a decision under section 34 of this Decree the FISSA must

(1)give to the Sponsored Party at least 30 days written notice of the FISSAs intention tomake the decision, setting out details of that proposed decision and the reasons for it, and

inviting the Sponsored Party to make a written submission to the FISSA about the

proposed decision within a specified timeframe, if there are any objections,

(2) take into account in the decision any submissions received, and

(3)where the decision taken in pursuance with section 35(2) is to revoke the Sponsorship

Certificate, give the Sponsored Party no fewer than 6 months notice before that

revocation takes effect.

Renewal

36.

(1)A Sponsored Party can apply to the FISSA for a Sponsorship Certificate or Seabed

Minerals Agreement to be renewed for a period of up to five years, provided theapplication for renewal is received at least 9 months before the expiry date of any initial

term.

(2)The FISSA will inform the Sponsored Company of whether the renewal has been granted

or refused within 3 months of the receipt of the application for renewal, and until that

decision is communicated the Sponsorship Certificate shall be deemed to continue in

force.

(3)Where the renewal is to be refused, the FISSA will follow the processes contained in

sections 3635(1)-(3) of this Decree.

Ongoing liability after termination

Hannah 20/2/13 3:01 PM

Hannah 14/2/13 3:07 PM

Hannah 14/2/13 3:08 PM

Hannah 20/2/13 3:02 PM

Comment: LH similarly concerned with this

provision, and suggest the wording needs tightening(to clarify that the trigger circumstance is where a

company shows no intention to perform the work)and/or tying into ISA rules, as ISA already requirethat the plan of work (with certain expenditure /

performance targets) is adhered to (but permits somevariation, if circumstances change e.g. marketconditions, which is quite likely)

Comment: A section needs to be added toestablish the procedures for giving notice.

Comment: A section also needs adding to express

that a holder of a Sponsorship Certificate /

Agreement for Exploration will have a presumptive

right to obtain a Sponsorship Certificate / Agreementfor Exploitation.

Comment: Should be clarified that multiple

(indefinite) renewals can be granted e.g. may berenewed for successive periods of 5 years each


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DRAFT 13/02/13

37.A Sponsoring Party shall remain

(1) subject to any ongoing obligations, including requirements to submit reports and to make

payments to the FISSA; and

(2) responsible for any damage from its wrongful acts or otherwise arising from its Seabed

Minerals Activities in accordance with this Decree, notwithstanding that its Sponsorship

Certificate has terminated.

PART 7 - FISCAL ARRANGEMENTS

Payments by Sponsored Parties

38.

(1)Sponsorship Application fee - A Sponsorship Applicant shall pay to the FISSA upon

submission of a Sponsorship Application, a non-refundable fee of US$100,000.

(2)Administration fees

(a)The holder of a Sponsorship Certificate shall pay to the FISSA an administration feeof US$150,000:

(i) within six months from the date of the issue of the Sponsorship Certificate, and

(ii)every year after that, on the anniversary each year of the date of the issue of the

Sponsorship Certificate.

(b)During the fifth year of the Sponsorship Certificate term, the FISSA may review theamount of the administration fee required each year for the remainder of the term of

the Sponsorship Certificate.

(3)Seabed Minerals royalties

(a)The holder of a contract for Exploitation under Fijis sponsorship shall pay to theFISSA such sums by way of royalty for the commercial extraction of Seabed

Minerals as shall be agreed and specified in a written agreement between Fiji and the

Sponsored Party at least one year prior to the commencement of Exploitation by the

Sponsored Party.

(b)The royalty amount will be based on a percentage of the latest market value of themetal content contained in the Seabed Minerals extracted by the Sponsored Party

through the Seabed Minerals Activities.

Tax Exemption

39.[A Sponsored Party will be exempt from the payment of corporate tax within Fiji in relation

to its profit from Seabed Mineral Activities this provision to be confirmed].

Financial payments to the ISA

40.A Sponsored Party will be responsible to make prompt and full payment of any sums due to

the ISA, under the Rules of the ISA.

Recovery of payments owed by Sponsored Parties

Hannah 20/2/13 3:03 PM

Hannah 20/2/13 3:04 PM

Comment: LH request that these specific figures

are removed from the Decree and replaced with aprovision permitting the Government to negotiatefinancial terms in a Sponsorship Agreement. NBThe suggested fees are too high for LH. The UK

rates (GBP 10k for application, 15k for first year,25k after 6 years , 25k on each extension), which usean actual cost recovery mechanism would be more

feasibl for LH - perhaps with some small room for

negotiation, given that this is a developing country.

Comment: LH request to that the royalty

requirement is removed from the Law and replacedwith a provision permitting Government to negotiate

financial terms with each company as appropriate in

a Sponsorship Agreement. It is agreed that theintention is not to charge a royalty on production

before LH has recovered its set-up, exploration andmining costs, but rather to take a share of profits

(recovery fee) once / if those are realised similar

in effect to the LH / UK co. profit taxation set-up.LH also request the financial terms to specify thatthe arrangement must be within the range of rates

prevailing in respect of land-based mining of similarminerals (as per 1994 Agreement provision re ISAroyalties) NB this needs to be negotiated as may

leave Fiji at risk of little or no income. The partiescould agree to an objective expert / method of

determining what these prevailing rates for land-based mining are.


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DRAFT 13/02/13

41.A sum of money payable pursuant to section 38 of this Decree, is a debt due to the State, and

may be recovered in a court of competent jurisdiction;and

(1) in any such proceedings a certificate of the FISSA certifying that a specified sum of

money is so payable, shall be received as evidence of that fact;

(2)any royalty unpaid by the Sponsored Party may at the courts discretion be recovered

from any security deposited by the same Sponsored Party under section 42 of this Decree;

and(3) interest on the amount outstanding may additionally be charged at a Prescribed or

otherwise reasonable rate.

Security

42.

(1)The FISSA may within one year before Exploitation is due to commence require a

Sponsored Party to deposit security as a guarantee of performance of the obligations

attaching to the Seabed Minerals Agreement.

(2)The form and value of any such security required, and the terms upon which it will be

held, will be specified in a written agreement.

(3)A security deposited in accordance with this section may be used by the FISSA to take

steps towards fulfilling any obligations that the Sponsored Party fails to fulfil under this

Decree, or to rectify any damage of loss caused as a result of such failure.

PART 8 MISCELLANEOUS

Inquiries into Incidents

43.The FISSA may hold or may commission inquiries into Incidents.

Nothing to authorise unlawful interference with other sea users

44.Nothing in this Decree authorises the unlawful interference with the freedom of the high seas

or the conduct of Marine Scientific Research by other persons or nation under the general

principles of international law.

Rights of other States

45.Nothing in this Decree shall in any way affect the rights of coastal States in accordance with

Article 142 and other relevant provisions of the UN Convention on the Law of the Sea.

Interference with Seabed Mineral Activities or the FISSA

46.

(1)Unless authorised under this Decree or Regulations made under this Decree, any third

party who interferes with

(a) Seabed Mineral Activities, or(b)The FISSA or its representative in the performance of duties under this Decree,or incites another person to so behave,

Hannah 20/2/13 3:05 PM

Comment: LH request this is amended soGovernment is empowered to negotiate whether or

not to have such a security (and if so its amount,

how it is held, when it is released etc) on anindividual basis taking into account the

characteristics of that contractor.


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DRAFT 13/02/13

shall commit an offence and shall be liable to a fine not exceeding [$amount] or to a

prison term not exceeding [X] years or both.

(2)For the purposes of section 46(1), interfere includes physical interference, intimidation,

or the filing of vexatious claims whether in Fiji or any other nation and any other activity

designed to harass, or having the effect of harassing, obstructing, putting at risk or

delaying any representative of the FISSA or person conducting Seabed Mineral

Activities.

Public Officials prohibited from acquiring Seabed Mineral rights

47.

(1)No Public Official shall, directly or indirectly, acquire any right or interest in any contract

for Seabed Mineral Activities, and any document or transaction purporting to confer any

right or interest on any such officer shall be null and void.

(2)No Public Official engaged by the FISSA or the FISSA shall directly or indirectly acquire

or retain any share in a private company carrying on Seabed Mineral Activities.

Offence committed by a body corporate

48. Where an offence under this Decree that has been committed by a body corporate is

committed with the consent or connivance, or is attributable to the neglect, of any Director or

officer of the body corporate, that officer as well as the body corporate is guilty of that

offence.

Disputes

49.

(1)Any dispute arising between Fiji and another State in connection with Seabed Mineral

Activities shall be resolved pursuant to the provisions of the UN Convention on the Law

of the Sea

(2)Any dispute between Fiji and the Sponsored Party arising in connection with the

administration of this Decree shall be dealt with by:

(a) the parties attempting to reach settlement by mutual agreement or mediation, and inthe event this is not successful then

(b) by referral to arbitration to be conducted in accordance with the Arbitration Act.Regulations

50.The Minister may under this Decree make (and when made vary, alter, amend, revoke or

cancel) Regulations, with the Cabinets consent, prescribing anything required or authorised

to be Prescribed under this Decree or generally for carrying this Decree into effect, and any

such Regulations shall be consistent with the UN Convention on the Law of the Sea, the

Rules of the ISA, and other applicable standards of international law.

Hannah 14/2/13 3:27 PM

Hannah 14/2/13 3:28 PM

Comment: LH would require that the contract

stipulates the UK as the prevailing law and disputeresolution mechanisms.

Comment: LH request that any regulations shouldbe subject to public notice and consultationprocedures.

Documents

2012_2_13_draft_DSM_decree_Fiji